Chris Cox
Encyclopedia
Charles Christopher Cox (born October 16, 1952, St. Paul, Minnesota), is a former Chairman of the U.S. Securities and Exchange Commission, a 17-year Republican
member of the United States House of Representatives
, and member of the White House
staff in the Reagan Administration
. Prior to his Washington service he was a practicing attorney, teacher, and entrepreneur.
in Mendota Heights
, Minnesota in 1970, Cox earned his B.A. at the University of Southern California
in 1973, following an accelerated three-year course. He was also a member of Delta Tau Delta
fraternity. In 1977, he earned both an M.B.A.
from Harvard Business School
and a J.D.
from Harvard Law School
, where he was an Editor of the Harvard Law Review
. In 1977-78, he served as law clerk to Judge Herbert Y.C. Choy of the U.S. Court of Appeals for the Ninth Circuit
.
In October 1978, Cox was paralyzed from the waist down following a serious off-road Jeep accident in the rainforest on the Hawaiian
island of Molokai
. He eventually regained the ability to walk, but wore a harness of steel bars and leather straps for six months. He still has two metal screws in his back, and according to a 2005 Fortune
magazine profile, “has been in pain every day for the past 27 years.” Since he can't sit for extended periods of time, he has a special desk that allows him to work while standing.
As a contestant on the NBC-TV game show Password Plus, Cox won more than $5,000 over multiple appearances. According to a re-broadcast of Password Plus on the cable network GSN, Cox appeared in 1980 and won $5,400 cash.
During the second term of Ronald Reagan
from 1986 to 1988, he served as Senior Associate Counsel to the President
. His duties included advising on the nomination of three Supreme Court justices, the establishment of the Brady Commission following the 1987 market crash, and the drafting of legislative reform proposals for the federal budget process.
From 1977 to 1986, Cox was first an associate and then partner with the international law firm of Latham & Watkins
. At the time of his retirement in 1986 he was the Partner in Charge of the Corporate Department in the Orange County
office, and served as a member of the firm's national management. In 1982–83, Cox took a leave of absence from Latham & Watkins
to teach federal income tax at Harvard Business School
.
In 1984, Cox co-founded Context Corporation, which produced daily English reproductions of the leading Soviet state-controlled newspaper, Pravda
. The publication was used chiefly by U.S. universities and U.S. government agencies, and was eventually distributed to customers in 26 countries around the world. The company had no connection to the Soviet government.
Cox was elected to Congress in 1988 from what was then California's
40th District. He was re-elected eight more times from this Orange County
-based district, which was renumbered as the 47th District in 1993 and the 48th District in 2003.
Early in his congressional career, Cox befriended two anti-Communists in Hungary and Lithuania who had been prisoners of conscience and who later became presidents of their countries after the end of Soviet
domination. Cox met Árpád Göncz
in 1989, and when Cox was later married, he spent part of his honeymoon in Hungary with then-President Göncz
and his wife Mária. Cox met Dr. Vytautas Landsbergis
, a professor at the Conservatory of Music in Vilnius
, in 1989, well before the successful reestablishment of Lithuanian independence. The night Landsbergis
was elected President of Lithuania, he embraced Cox on the tarmac at the airport in Vilnius
after the Soviet Union
had held Cox in East Berlin
for a prolonged period. In May 1998, Cox was presented with the Order of the Lithuanian Grand Duke Gediminas, the highest honor the Republic of Lithuania can give to a living noncitizen.
In 1989, Polish President Lech Wałęsa
joined Cox in a Washington, DC
ceremony marking the enactment of Cox's legislation establishing the Polish-American Enterprise Fund. Together with the Baltic-American Enterprise Fund, the Hungarian-American Enterprise Fund, and seven other enterprise funds in Central and Eastern Europe and the former Soviet Union
, the Cox legislation, incorporated in the Support Eastern European Democracy (SEED) Act, matched U.S. foreign aid with venture capital in the newly free countries of the former Warsaw Pact
.
In 1994, Cox was appointed by President Clinton
to the Bipartisan Commission on Entitlement and Tax Reform, which in 1995 published a unanimous report warning that the nation cannot continue to allow entitlement programs to consume a rapidly increasing share of the federal budget.
Among Cox's most notable legislative successes as a Representative was the Internet Tax Freedom Act
, a 1998 law prohibiting federal, state, and local government taxation of Internet
access and banning Internet-only levies such as email taxes, bit taxes, and bandwidth taxes. With U.S. Rep.
Barney Frank
(D-MA) as his chief co-sponsor, Cox authored legislation in 1997 to privatize the National Helium Reserve
, which was then $1.4 billion in debt to taxpayers. As of 2004, this was the third-largest privatization
in U.S. history, surpassing the value of the 1988 Conrail privatization
. Cox also wrote the only law that was enacted over President Bill Clinton
's veto, the Private Securities Litigation Reform Act
of 1995, aimed at protecting investors from fraudulent and extortionate lawsuits.
For 10 of his 17 years in the Congress, from 1995 to 2005, Cox served in the House Majority Leadership as Chairman of the House Republican Policy Committee, the fifth-ranking elected leadership position (behind the Speaker
, the Majority Leader, the Majority Whip, and the Chair of the House Republican Conference). He was Chairman of the House Committee on Homeland Security, and also Chairman of the Select Committee on U.S. National Security that produced the Cox report
, an indictment of Chinese espionage and of security failures at several U.S. national laboratories
.
When Congress established the Bipartisan Study Group on Enhancing Multilateral Export Controls through federal legislation in 1999, Cox was tapped as co-chairman. The group published a unanimous report in 2001 recommending wholesale modernization of U.S. export controls. Cox also served as Chairman of the Select Committee on Homeland Security (the predecessor to the permanent House Committee); Chairman of the Task Force on Capital Markets; and Chairman of the Task Force on Budget Process Reform.
In the spring of 2001, then-Representative Cox was considered by President George W. Bush
for a federal appellate judgeship on the U.S. Court of Appeals for the Ninth Circuit
. Cox withdrew his name from consideration before a nomination could be made because one of his home state Democratic Senators, Barbara Boxer
, objected to him due to his perceived conservatism http://query.nytimes.com/gst/fullpage.html?res=9C01E3D61F30F937A15757C0A9679C8B63http://query.nytimes.com/gst/fullpage.html?res=9B01E3D71030F935A15755C0A9679C8B63&sec=&spon=&pagewanted=all. The seat that Cox had been considered for was eventually filled by Bush nominee Carlos T. Bea.
to be the 28th Chairman of the United States Securities and Exchange Commission
(SEC) on June 2, 2005 and unanimously confirmed by the United States Senate
on July 29, 2005. He was sworn in on August 3, 2005.
Shortly after becoming SEC Chairman, he was diagnosed with thymoma, a rare form of cancer, and underwent surgery in January 2006 to remove a tumor from his chest. He is now healthy. He returned to work "after several weeks recovering from surgery," according to The Associated Press
.
In May 2008, Cox delivered the Commencement Address at Northeastern University in Boston
, Massachusetts
. In April 2008, he received the University of Southern California's
highest award, the Asa V. Call Achievement Award, in a ceremony at the Los Angeles Millenium Biltmore Hotel
.
The Housing and Economic Recovery Act of 2008
, enacted in July 2008, gave Cox one of five seats on the Federal Housing Finance Oversight Board, which advises the Director of the Federal Housing Finance Agency
with respect to overall strategies and policies regarding the safety and soundness of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks
. In September 2008, the U.S. Congress
passed and President Bush
signed the Emergency Economic Stabilization Act of 2008
, which placed Cox on the newly established Financial Stability Oversight Board that oversees the $700 billion Troubled Assets Relief Program
.
observed that the Commission "largely stood its ground amid pressure from compensation specialists, investor advocates, and industry groups." With more than 20,000 comment letters, Cox said, "No issue in the history of the SEC has
generated such interest."
One of his first initiatives was launching a plain English effort, to eliminate legalese in investor communications in favor of clear language that let investors focus on what was important, the better to hold a company's performance up to the light of day. Not only the executive compensation rules, but also disclosure rules for investment advisors and mutual funds—where more than half of U.S. households had their retirement and college savings—were subjected to the plain English requirements. Under Cox the SEC wrote new rules requiring the $10.6 trillion dollar mutual fund industry to make their prospectuses easier for investors to read, understand, and access.
Cox defended the 2002 Sarbanes-Oxley Act
and resisted efforts to repeal it or scale it back legislatively. The greatest source of complaint about the law during his tenure was its Section 404, which produced compliance expenses far higher than the SEC under his predecessor had predicted. Working with the Public Company Accounting Oversight Board
, the SEC under Cox replaced the original auditing standard for Section 404 with a streamlined, more cost-effective version, and also provided new guidance for management intended to reduce unnecessary costs. At Cox's direction the agency undertook a nationwide Small Business Cost-Benefit Study to determine whether, as intended, the new auditing standard and management guidance had made compliance less expensive and better focused the 404 process on control elements that truly matter for companies of all sizes.
In June 2007 the Commission voted unanimously to repeal the so-called "uptick rule"
or "tick test."
The action was not controversial at the time: it was taken after an extensive multi-year study by the Office of Economic Analysis, begun in 2003 under Chairman Bill Donaldson
. The study found that the rule—which had never applied on NASDAQ
or to ECN
s and other trading systems—had been rendered ineffective on the NYSE due to decimalization (that is, the reduction of the "tick" increment to a penny, as compared to the 1/8 or 12½¢ that was in effect when the rule was adopted in 1938). Its repeal has since become the subject of much debate, with some advocating its reinstatement. On July 15, 2008, Cox told a U.S. House hearing that the Commission was studying the potential institution of "a price test that could work with an increment of a nickel or dime" or some more meaningful amount.
, with a new interactive disclosure system using computer-tagged data in the eXtensible Business Reporting Language
(XBRL
). The new system was designed to let future investors easily search, sort, and recombine information to generate reports and analysis from hundreds of thousands of companies and millions of forms. Under Cox the SEC oversaw the creation of a taxonomy of over 11,000 XBRL data tags that catalog every element of U.S. Generally Accepted Accounting Principles. In 2008 the Commission issued rules requiring all publicly traded companies and mutual funds in the United States to tag their financial information.
Another Cox technology initiative liberalized the proxy rules to allow investors and companies to use Electronic Shareholder Forums—virtual meeting places on the Internet to promote shareholder initiatives, conduct straw polls, apprise a company's directors of critical shareholder concerns, and inform shareholders of management's and directors' views.
In 2006 the SEC launched a war against Internet financial spam
, shutting down trading in companies that touted their stock by clogging investors’ in-boxes. Investor complaints about the practice fell from more than 220,000 per month in December 2006 to 70,000 per month in February 2007; Internet software and services company Symantec
credited the SEC with cutting financial spam by 30 percent.
These technological initiatives were widely supported, with one observer noting that Cox "earned virtually universal plaudits for efforts to modernize technology, transparency, and understandability of corporate reports, and to provide for apples-to-apples comparisons (for the first time ever) of corporate executive compensation."
, the Financial Industry Regulatory Authority
, the North American Securities Administrators Association
, and several state regulators; the conferences are now held annually. A nationwide sweep examination conducted by the SEC and authorities in seven states found that "free lunch" investment seminars, which draw large numbers of retirees, routinely involved significant fraud
. Many were advised to put their retirement funds into equity-indexed annuities, where they could get stock market returns while keeping their money “safe”. But neither these investments, nor the sales agents, were registered with state or federal securities regulators—and investors were frequently unaware that it would be impossible to get their money back for as much as 15 years without paying a stiff penalty. The SEC enacted rules in 2008 to protect seniors and other investors from fraudulent and abusive practices in annuities sales.
' Technical Committee, he led international efforts to converge U.S. GAAP and International Financial Reporting Standards
. In December 2007, the SEC adopted rules to permit foreign issuers to use IFRS
without reconciliation to U.S. GAAP. And in November 2008, the
SEC issued a roadmap – with clear milestones along the way – that could take U.S. public companies to mandatory adoption of IFRS
as early as 2014. Cox also initiated a mutual recognition process for foreign regulators, based on an assessment of whether the securities regulatory system in another country produces comparably high-quality results for investors, including in the area of enforcement. In August 2008 he executed an arrangement with the Australian Securities and Investments Commission
under which the SEC could approve exemptions allowing Australian-registered securities exchanges to operate in the U.S. without having also to register with the SEC, and U.S. exchanges would have the same privilege in Australia. As of 2008, the SEC was in mutual recognition discussions with regulators in Canada, and also in preliminary discussions with the Committee of European Securities Regulators.
. Under Cox the SEC also brought the largest number of cases in its history charging corporations and their officers with foreign bribery under the Foreign Corrupt Practices Act
and imposed record penalites for these cases.
Overall, enforcement was Cox's stated priority beginning in 2005 and throughout his chairmanship. He moved quickly to settle the debate over whether it was legitimate to impose penalties on corporations, adopting a policy that made clear the SEC "isn't turning out to be the corporate-friendly place that many in the boardroom set were hoping for." Within the SEC budget, as of 2008, he had increased the share devoted to enforcement to its highest level in 20 years. Nonetheless, the SEC's overall appropriation was held steady during two of his budget years, first by a Republican and then a Democratic Congress, and it was increased by only 2% in a third year. These sub-inflation agency budgets, combined with merit pay increases for staff, caused the total enforcement personnel to decline. Critics have attacked the underfunding of the SEC and blamed Cox, though Congress and the administration clearly share the responsibility. When the agency budget was finally increased in fiscal 2008, he increased enforcement personnel by 4%.
Beginning early in his chairmanship he focused the agency's enforcement efforts on stock option backdating
, an illicit practice that had been exposed after the 2002 Sarbanes-Oxley Act
changed the rules regarding the reporting of stock option
grants. Under Cox the SEC investigated more than 160 stock option backdating
cases, aided by the fact that the reporting forms for stock option
disclosure were among the first to be mandated in “interactive data” format. Some of these cases were noteworthy for their size: in December 2007 the agency won $468 million in a settlement for stock option backdating
against the former Chairman and CEO of UnitedHealth Group
.
Cox also aggressively used the agency's “Fair Funds” authority to distribute funds recovered from securities law violators directly to injured investors. By February 2008 the SEC had returned more than $3.5 billion to wronged investors, including more than $2 billion in 2007 alone. To expedite the return of the funds, cut red tape and lower costs, Cox created a new Office of Collections and Distributions. A few weeks later, in May 2008, the new Office began sending more than $800 million in Fair Funds to harmed investors in American International Group, Inc. (AIG)
, which settled SEC charges of financial fraud
. In 2006 the Commission obtained a $350 million penalty from Fannie Mae after accusing it of accounting fraud
; the penalty was one of the largest in Commission history. The following year the Commission charged Freddie Mac with accounting fraud
and recovered a $50 million penalty.
As the 2008 credit crunch
spread to municipal finance
, the auction rate securities
market froze, leaving investors without access to their cash. The SEC immediately investigated the largest firms in the market and entered into settlements that are the largest in the history of the SEC, amounting to up to $30 billion to injured
investors.
Cox also targeted municipal securities
fraud
. In April 2008 the SEC charged five former San Diego city officials with securities fraud
involving billions in undisclosed pension liabilities that had placed the city and taxpayers in serious financial jeopardy. Throughout his chairmanship he railed against the inadequacy of disclosure to investors in municipal securities, which the SEC does not regulate, and asked Congress for explicit authority for the agency to do so. In December 2008, the SEC under his leadership authorized the creation of a free, Internet-accessible repository for municipal finance disclosure. "With liquidity problems of municipal auction rate securities and rating downgrades of municipal bond insurers contributing to the current credit crisis, the disclosure and transparency of the municipal markets have never been more critical", he said.
In late December 2008, following the filing of SEC charges against notorious New York investment advisor
Bernard Madoff
alleging a $50 billion fraud, Cox stated that he was "gravely concerned" that "specific and credible evidence" provided to the agency over a period of at least 10 years had not previously been referred to the Commission for commencement of a formal investigation. He ordered an internal investigation by the agency's Inspector General. According to Bloomberg News, investigators have since found evidence of Madoff's misconduct stretching as far back as at least the 1970s.
, in which the seller intentionally fails to deliver the shares sold short in time for settlement, was banned outright, an exception for options market maker
s that had been in place for several years was eliminated, and a new anti-fraud provision, Rule 10b-21, was adopted to give specific enforcement authority in such cases. In September 2008, short selling of 799 financial stocks was temporarily curtailed in response to rumors accompanied by heightened short selling activity in the shares of major financial institutions.
On September 26, 2008, Cox ended the 2004 program for voluntary regulation of investment bank holding companies, begun under SEC Chairman William Donaldson
and then-Director of Market Regulation (later SEC Commissioner) Annette Nazareth
. The program "was fundamentally flawed from the beginning, because investment banks could opt in or out of supervision voluntarily" Cox said. A critical report by the SEC inspector general that evaluated the program in light of the Bear Stearns
near-failure in March 2008 found that while "Bear Stearns
was compliant with the capital and liquidity requirements" at the time of its acquisition, "its collapse raises serious questions about the adequacy of these requirements." However, according to the Inspector General, his report "did not include a determination of the cause of Bear Stearns'
collapse" or determine "whether any of these issues directly contributed to Bear Stearns'
collapse." On that subject, the report stated, "we have no evidence linking these significant deficiencies with the cause of Bear Stearns'
collapse." Cox criticized the oversight program on the ground that because of its voluntary nature and the SEC's limited statutory authority, the agency could not force changes in the hundreds of unregulated subsidiaries of large investment banks such as Goldman Sachs
, Morgan Stanley
, Merrill Lynch
, Lehman Brothers
and Bear Stearns
as bank regulators could do with bank holding companies.http://www.sec.gov/news/testimony/2008/ts092308cc.htmIn testimony before Congress
on several occasions in 2008, he asked for statutory authority to regulate investment bank holding companies.]
In addition to the fact that the Gramm-Leach-Bliley Act
did not give the SEC the authority to regulate large investment bank holding companies, Cox noted that investors were vulnerable to other regulatory gaps such as the fact that the $60 trillion market for credit default swaps
is completely unregulated. "Neither the SEC nor any regulator has authority even to require minimum disclosure", he said. In testimony and public statements he urged Congress
to enact remedial legislation.
Cox said that during the buildup of the credit crisis, when the credit rating agencies
were still unregulated, they gave top credit ratings to financial instruments which packaged risky loans and spread the negative impacts of the credit crisis more broadly throughout the markets. Following the first-time SEC registration of the credit rating agencies
in September 2007 under newly enacted legislative authority, he ordered a 10-month examination of the three major rating agencies
that uncovered significant weaknesses in their ratings practices for mortgage-backed securities
and that called into question the impartiality of their ratings. The results were reported to Congress
in July 2008. The SEC immediately commenced a rulemaking which concluded on December 3, 2008 with approval of a series of measures to regulate the conflicts of interests, disclosures, internal policies, and business practices of credit rating agencies
. The regulations were intended to ensure that firms provide more meaningful ratings and greater disclosure to investors concerning collateralized debt obligation
s and residential mortgage-backed securities
.
In an interview with the Washington Post in late December 2008, Cox said, "What we have done in this current turmoil is stay calm, which has been our greatest contribution -- not being impulsive, not changing the rules willy-nilly, but going through a very professional and orderly process that takes into account unintended consequences and gives ample notice to market participants." Cox added that the Commission's decision to impose a three-week ban on short selling of financial company stocks was taken reluctantly, but that the view at the time, including from Treasury Secretary Henry M. Paulson and Federal Reserve chairman Ben Bernanke
, was that "if we did not act and act at that instant, these financial institutions could fail as a result and there would be nothing left to save." In a December 2008 interview with Reuters, he explained that the SEC's Office of Economic Analysis was still evaluating data from the temporary ban, and that preliminary findings point to several unintended market consequences and side effects. "While the actual effects of this temporary action will not be fully understood for many more months, if not years... knowing what we know now, I believe on balance the Commission would not do it again."
Cox retired as chairman of the SEC at the end of the Bush administration
, on January 20, 2009.
office. He also became a principal in Bingham Consulting Group, the firm's affiliated consulting business. Other notable principals in Bingham Consulting include former California governor Pete Wilson
and former New Hampshire
governor Steve Merrill
, who is its president.
Congressional
Republican Party (United States)
The Republican Party is one of the two major contemporary political parties in the United States, along with the Democratic Party. Founded by anti-slavery expansion activists in 1854, it is often called the GOP . The party's platform generally reflects American conservatism in the U.S...
member of the United States House of Representatives
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
, and member of the White House
White House
The White House is the official residence and principal workplace of the president of the United States. Located at 1600 Pennsylvania Avenue NW in Washington, D.C., the house was designed by Irish-born James Hoban, and built between 1792 and 1800 of white-painted Aquia sandstone in the Neoclassical...
staff in the Reagan Administration
Reagan Administration
The United States presidency of Ronald Reagan, also known as the Reagan administration, was a Republican administration headed by Ronald Reagan from January 20, 1981, to January 20, 1989....
. Prior to his Washington service he was a practicing attorney, teacher, and entrepreneur.
Pre-congressional career
After graduating from Saint Thomas AcademySaint Thomas Academy
Saint Thomas Academy , originally known as Saint Thomas Aquinas Seminary, and formerly known as Saint Thomas Military Academy is the only all male, Roman Catholic, college-preparatory, military high school in Minnesota. It is located in Mendota Heights near Saint Paul...
in Mendota Heights
Mendota Heights, Minnesota
At the 2000 census, there were 11,434 people, 4,178 households and 3,237 families residing in the town. The population density was 1,222.2 per square mile . There were 4,252 housing units at an average density of 454.5 per square mile...
, Minnesota in 1970, Cox earned his B.A. at the University of Southern California
University of Southern California
The University of Southern California is a private, not-for-profit, nonsectarian, research university located in Los Angeles, California, United States. USC was founded in 1880, making it California's oldest private research university...
in 1973, following an accelerated three-year course. He was also a member of Delta Tau Delta
Delta Tau Delta
Delta Tau Delta is a U.S.-based international secret letter college fraternity. Delta Tau Delta was founded in 1858 at Bethany College, Bethany, Virginia, . It currently has around 125 student chapters nationwide, as well as more than 25 regional alumni groups. Its national community service...
fraternity. In 1977, he earned both an M.B.A.
Master of Business Administration
The Master of Business Administration is a :master's degree in business administration, which attracts people from a wide range of academic disciplines. The MBA designation originated in the United States, emerging from the late 19th century as the country industrialized and companies sought out...
from Harvard Business School
Harvard Business School
Harvard Business School is the graduate business school of Harvard University in Boston, Massachusetts, United States and is widely recognized as one of the top business schools in the world. The school offers the world's largest full-time MBA program, doctoral programs, and many executive...
and a J.D.
Juris Doctor
Juris Doctor is a professional doctorate and first professional graduate degree in law.The degree was first awarded by Harvard University in the United States in the late 19th century and was created as a modern version of the old European doctor of law degree Juris Doctor (see etymology and...
from Harvard Law School
Harvard Law School
Harvard Law School is one of the professional graduate schools of Harvard University. Located in Cambridge, Massachusetts, it is the oldest continually-operating law school in the United States and is home to the largest academic law library in the world. The school is routinely ranked by the U.S...
, where he was an Editor of the Harvard Law Review
Harvard Law Review
The Harvard Law Review is a journal of legal scholarship published by an independent student group at Harvard Law School.-Overview:According to the 2008 Journal Citation Reports, the Review is the most cited law review and has the second-highest impact factor in the category "law" after the...
. In 1977-78, he served as law clerk to Judge Herbert Y.C. Choy of the U.S. Court of Appeals for the Ninth Circuit
United States Court of Appeals for the Ninth Circuit
The United States Court of Appeals for the Ninth Circuit is a U.S. federal court with appellate jurisdiction over the district courts in the following districts:* District of Alaska* District of Arizona...
.
In October 1978, Cox was paralyzed from the waist down following a serious off-road Jeep accident in the rainforest on the Hawaiian
Hawaii
Hawaii is the newest of the 50 U.S. states , and is the only U.S. state made up entirely of islands. It is the northernmost island group in Polynesia, occupying most of an archipelago in the central Pacific Ocean, southwest of the continental United States, southeast of Japan, and northeast of...
island of Molokai
Molokai
Molokai or Molokai is an island in the Hawaiian archipelago. It is 38 by 10 miles in size with a land area of , making it the fifth largest of the main Hawaiian Islands and the 27th largest island in the United States. It lies east of Oahu across the 25-mile wide Kaiwi Channel and north of...
. He eventually regained the ability to walk, but wore a harness of steel bars and leather straps for six months. He still has two metal screws in his back, and according to a 2005 Fortune
Fortune (magazine)
Fortune is a global business magazine published by Time Inc. Founded by Henry Luce in 1930, the publishing business, consisting of Time, Life, Fortune, and Sports Illustrated, grew to become Time Warner. In turn, AOL grew as it acquired Time Warner in 2000 when Time Warner was the world's largest...
magazine profile, “has been in pain every day for the past 27 years.” Since he can't sit for extended periods of time, he has a special desk that allows him to work while standing.
As a contestant on the NBC-TV game show Password Plus, Cox won more than $5,000 over multiple appearances. According to a re-broadcast of Password Plus on the cable network GSN, Cox appeared in 1980 and won $5,400 cash.
During the second term of Ronald Reagan
Ronald Reagan
Ronald Wilson Reagan was the 40th President of the United States , the 33rd Governor of California and, prior to that, a radio, film and television actor....
from 1986 to 1988, he served as Senior Associate Counsel to the President
White House Counsel
The White House Counsel is a staff appointee of the President of the United States.-Role:The Counsel's role is to advise the President on all legal issues concerning the President and the White House...
. His duties included advising on the nomination of three Supreme Court justices, the establishment of the Brady Commission following the 1987 market crash, and the drafting of legislative reform proposals for the federal budget process.
From 1977 to 1986, Cox was first an associate and then partner with the international law firm of Latham & Watkins
Latham & Watkins
Latham & Watkins LLP is a global law firm, one of the largest in the world. Latham currently employs approximately 2,000 attorneys in the United States, Europe, the Middle East and Asia. The firm was started in Los Angeles in 1934 and has extensive Californian roots, but its largest office is now...
. At the time of his retirement in 1986 he was the Partner in Charge of the Corporate Department in the Orange County
Orange County, California
Orange County is a county in the U.S. state of California. Its county seat is Santa Ana. As of the 2010 census, its population was 3,010,232, up from 2,846,293 at the 2000 census, making it the third most populous county in California, behind Los Angeles County and San Diego County...
office, and served as a member of the firm's national management. In 1982–83, Cox took a leave of absence from Latham & Watkins
Latham & Watkins
Latham & Watkins LLP is a global law firm, one of the largest in the world. Latham currently employs approximately 2,000 attorneys in the United States, Europe, the Middle East and Asia. The firm was started in Los Angeles in 1934 and has extensive Californian roots, but its largest office is now...
to teach federal income tax at Harvard Business School
Harvard Business School
Harvard Business School is the graduate business school of Harvard University in Boston, Massachusetts, United States and is widely recognized as one of the top business schools in the world. The school offers the world's largest full-time MBA program, doctoral programs, and many executive...
.
In 1984, Cox co-founded Context Corporation, which produced daily English reproductions of the leading Soviet state-controlled newspaper, Pravda
Pravda
Pravda was a leading newspaper of the Soviet Union and an official organ of the Central Committee of the Communist Party between 1912 and 1991....
. The publication was used chiefly by U.S. universities and U.S. government agencies, and was eventually distributed to customers in 26 countries around the world. The company had no connection to the Soviet government.
U.S. Congress
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
40th District. He was re-elected eight more times from this Orange County
Orange County, California
Orange County is a county in the U.S. state of California. Its county seat is Santa Ana. As of the 2010 census, its population was 3,010,232, up from 2,846,293 at the 2000 census, making it the third most populous county in California, behind Los Angeles County and San Diego County...
-based district, which was renumbered as the 47th District in 1993 and the 48th District in 2003.
Early in his congressional career, Cox befriended two anti-Communists in Hungary and Lithuania who had been prisoners of conscience and who later became presidents of their countries after the end of Soviet
Soviet Union
The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....
domination. Cox met Árpád Göncz
Árpád Göncz
Árpád Göncz is a Hungarian liberal politician and former President of Hungary . Göncz played a role in the Hungarian Revolution of 1956...
in 1989, and when Cox was later married, he spent part of his honeymoon in Hungary with then-President Göncz
Árpád Göncz
Árpád Göncz is a Hungarian liberal politician and former President of Hungary . Göncz played a role in the Hungarian Revolution of 1956...
and his wife Mária. Cox met Dr. Vytautas Landsbergis
Vytautas Landsbergis
Professor Vytautas Landsbergis is a Lithuanian conservative politician and Member of the European Parliament. He was the first head of state of Lithuania after its independence declaration from the Soviet Union, and served as the Head of the Lithuanian Parliament Seimas...
, a professor at the Conservatory of Music in Vilnius
Vilnius
Vilnius is the capital of Lithuania, and its largest city, with a population of 560,190 as of 2010. It is the seat of the Vilnius city municipality and of the Vilnius district municipality. It is also the capital of Vilnius County...
, in 1989, well before the successful reestablishment of Lithuanian independence. The night Landsbergis
Vytautas Landsbergis
Professor Vytautas Landsbergis is a Lithuanian conservative politician and Member of the European Parliament. He was the first head of state of Lithuania after its independence declaration from the Soviet Union, and served as the Head of the Lithuanian Parliament Seimas...
was elected President of Lithuania, he embraced Cox on the tarmac at the airport in Vilnius
Vilnius
Vilnius is the capital of Lithuania, and its largest city, with a population of 560,190 as of 2010. It is the seat of the Vilnius city municipality and of the Vilnius district municipality. It is also the capital of Vilnius County...
after the Soviet Union
Soviet Union
The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....
had held Cox in East Berlin
East Berlin
East Berlin was the name given to the eastern part of Berlin between 1949 and 1990. It consisted of the Soviet sector of Berlin that was established in 1945. The American, British and French sectors became West Berlin, a part strongly associated with West Germany but a free city...
for a prolonged period. In May 1998, Cox was presented with the Order of the Lithuanian Grand Duke Gediminas, the highest honor the Republic of Lithuania can give to a living noncitizen.
In 1989, Polish President Lech Wałęsa
Lech Wałęsa
Lech Wałęsa is a Polish politician, trade-union organizer, and human-rights activist. A charismatic leader, he co-founded Solidarity , the Soviet bloc's first independent trade union, won the Nobel Peace Prize in 1983, and served as President of Poland between 1990 and 95.Wałęsa was an electrician...
joined Cox in a Washington, DC
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
ceremony marking the enactment of Cox's legislation establishing the Polish-American Enterprise Fund. Together with the Baltic-American Enterprise Fund, the Hungarian-American Enterprise Fund, and seven other enterprise funds in Central and Eastern Europe and the former Soviet Union
Soviet Union
The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....
, the Cox legislation, incorporated in the Support Eastern European Democracy (SEED) Act, matched U.S. foreign aid with venture capital in the newly free countries of the former Warsaw Pact
Warsaw Pact
The Warsaw Treaty Organization of Friendship, Cooperation, and Mutual Assistance , or more commonly referred to as the Warsaw Pact, was a mutual defense treaty subscribed to by eight communist states in Eastern Europe...
.
In 1994, Cox was appointed by President Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...
to the Bipartisan Commission on Entitlement and Tax Reform, which in 1995 published a unanimous report warning that the nation cannot continue to allow entitlement programs to consume a rapidly increasing share of the federal budget.
Among Cox's most notable legislative successes as a Representative was the Internet Tax Freedom Act
Internet Tax Freedom Act
The 1998 Internet Tax Freedom Act was a United States law authored by Representative Christopher Cox and Senator Ron Wyden, and signed into law on October 21, 1998 by President Bill Clinton in an effort to promote and preserve the commercial, educational, and informational potential of the Internet...
, a 1998 law prohibiting federal, state, and local government taxation of Internet
Internet taxes
From the inception of the Internet until the late 1990s, the Internet was free of regulation by government in the United States at all levels, and also free of any specially targeted tax levies, duties, imposts, or license fees. By 1996, however, that began to change, as several U.S...
access and banning Internet-only levies such as email taxes, bit taxes, and bandwidth taxes. With U.S. Rep.
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
Barney Frank
Barney Frank
Barney Frank is the U.S. Representative for . A member of the Democratic Party, he is the former chairman of the House Financial Services Committee and is considered the most prominent gay politician in the United States.Born and raised in New Jersey, Frank graduated from Harvard College and...
(D-MA) as his chief co-sponsor, Cox authored legislation in 1997 to privatize the National Helium Reserve
National Helium Reserve
The National Helium Reserve, also known as the Federal Helium Reserve, is a strategic reserve of the United States holding over a billion cubic meter of helium gas. The helium is stored at the Cliffside Storage Facility about northwest of Amarillo, Texas, in a natural geologic gas storage...
, which was then $1.4 billion in debt to taxpayers. As of 2004, this was the third-largest privatization
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
in U.S. history, surpassing the value of the 1988 Conrail privatization
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
. Cox also wrote the only law that was enacted over President Bill Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...
's veto, the Private Securities Litigation Reform Act
Private Securities Litigation Reform Act
The United States Private Securities Litigation Reform Act of 1995, Pub. L. 104-67, 109 Stat. 737 implemented several substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation, and...
of 1995, aimed at protecting investors from fraudulent and extortionate lawsuits.
For 10 of his 17 years in the Congress, from 1995 to 2005, Cox served in the House Majority Leadership as Chairman of the House Republican Policy Committee, the fifth-ranking elected leadership position (behind the Speaker
Speaker of the United States House of Representatives
The Speaker of the United States House of Representatives, or Speaker of the House, is the presiding officer of the United States House of Representatives...
, the Majority Leader, the Majority Whip, and the Chair of the House Republican Conference). He was Chairman of the House Committee on Homeland Security, and also Chairman of the Select Committee on U.S. National Security that produced the Cox report
Cox Report
The Report of the Select Committee on U.S. National Security and Military/Commercial Concerns with the People's Republic of China, commonly known as the Cox Report after Representative Christopher Cox, is a classified U.S...
, an indictment of Chinese espionage and of security failures at several U.S. national laboratories
United States Department of Energy National Laboratories
The United States Department of Energy National Laboratories and Technology Centers are a system of facilities and laboratories overseen by the United States Department of Energy for the purpose of advancing science and helping promote the economic and defensive national interests of the United...
.
When Congress established the Bipartisan Study Group on Enhancing Multilateral Export Controls through federal legislation in 1999, Cox was tapped as co-chairman. The group published a unanimous report in 2001 recommending wholesale modernization of U.S. export controls. Cox also served as Chairman of the Select Committee on Homeland Security (the predecessor to the permanent House Committee); Chairman of the Task Force on Capital Markets; and Chairman of the Task Force on Budget Process Reform.
In the spring of 2001, then-Representative Cox was considered by President George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
for a federal appellate judgeship on the U.S. Court of Appeals for the Ninth Circuit
United States Court of Appeals for the Ninth Circuit
The United States Court of Appeals for the Ninth Circuit is a U.S. federal court with appellate jurisdiction over the district courts in the following districts:* District of Alaska* District of Arizona...
. Cox withdrew his name from consideration before a nomination could be made because one of his home state Democratic Senators, Barbara Boxer
Barbara Boxer
Barbara Levy Boxer is the junior United States Senator from California . A member of the Democratic Party, she previously served in the U.S. House of Representatives ....
, objected to him due to his perceived conservatism http://query.nytimes.com/gst/fullpage.html?res=9C01E3D61F30F937A15757C0A9679C8B63http://query.nytimes.com/gst/fullpage.html?res=9B01E3D71030F935A15755C0A9679C8B63&sec=&spon=&pagewanted=all. The seat that Cox had been considered for was eventually filled by Bush nominee Carlos T. Bea.
U.S. Securities and Exchange Commission chairman
Cox was nominated by President George W. BushGeorge W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
to be the 28th Chairman of the United States Securities and Exchange Commission
United States Securities and Exchange Commission
The U.S. Securities and Exchange Commission is a federal agency which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States...
(SEC) on June 2, 2005 and unanimously confirmed by the United States Senate
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...
on July 29, 2005. He was sworn in on August 3, 2005.
Shortly after becoming SEC Chairman, he was diagnosed with thymoma, a rare form of cancer, and underwent surgery in January 2006 to remove a tumor from his chest. He is now healthy. He returned to work "after several weeks recovering from surgery," according to The Associated Press
Associated Press
The Associated Press is an American news agency. The AP is a cooperative owned by its contributing newspapers, radio and television stations in the United States, which both contribute stories to the AP and use material written by its staff journalists...
.
In May 2008, Cox delivered the Commencement Address at Northeastern University in Boston
Boston
Boston is the capital of and largest city in Massachusetts, and is one of the oldest cities in the United States. The largest city in New England, Boston is regarded as the unofficial "Capital of New England" for its economic and cultural impact on the entire New England region. The city proper had...
, Massachusetts
Massachusetts
The Commonwealth of Massachusetts is a state in the New England region of the northeastern United States of America. It is bordered by Rhode Island and Connecticut to the south, New York to the west, and Vermont and New Hampshire to the north; at its east lies the Atlantic Ocean. As of the 2010...
. In April 2008, he received the University of Southern California's
University of Southern California
The University of Southern California is a private, not-for-profit, nonsectarian, research university located in Los Angeles, California, United States. USC was founded in 1880, making it California's oldest private research university...
highest award, the Asa V. Call Achievement Award, in a ceremony at the Los Angeles Millenium Biltmore Hotel
Millennium Biltmore Hotel
The Millennium Biltmore Hotel, originally named the Los Angeles Biltmore Hotel of the Biltmore Hotels group, is a luxury hotel located on Pershing Square in Downtown Los Angeles, California. Upon its grand opening in 1923, the Los Angeles Biltmore was the largest hotel west of Chicago, Illinois in...
.
The Housing and Economic Recovery Act of 2008
Housing and Economic Recovery Act of 2008
The Housing and Economic Recovery Act of 2008 designed primarily to address the subprime mortgage crisis. It authorized the Federal Housing Administration to guarantee up to $300 billion in new 30-year fixed rate mortgages for subprime borrowers if lenders write-down principal loan balances to 90...
, enacted in July 2008, gave Cox one of five seats on the Federal Housing Finance Oversight Board, which advises the Director of the Federal Housing Finance Agency
Federal Housing Finance Agency
The Federal Housing Finance Agency is an independent federal agency created as the successor regulatory agency resulting from the statutory merger of the Federal Housing Finance Board , the Office of Federal Housing Enterprise Oversight , and the U.S...
with respect to overall strategies and policies regarding the safety and soundness of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks
Federal Home Loan Banks
The Federal Home Loan Banks are 12 U.S. government-sponsored banks that provide stable, on-demand, low-cost funding to American financial institutions for home mortgage loans, small business, rural, agricultural, and economic development lending...
. In September 2008, the U.S. Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
passed and President Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
signed the Emergency Economic Stabilization Act of 2008
Emergency Economic Stabilization Act of 2008
The Emergency Economic Stabilization Act of 2008 The Emergency Economic Stabilization Act of 2008 The Emergency Economic Stabilization Act of 2008 (Division A of , commonly referred to as a bailout of the U.S. financial system, is a law enacted in response to the subprime mortgage crisis...
, which placed Cox on the newly established Financial Stability Oversight Board that oversees the $700 billion Troubled Assets Relief Program
Troubled Assets Relief Program
The Troubled Asset Relief Program is a program of the United States government to purchase assets and equity from financial institutions to strengthen its financial sector that was signed into law by U.S. President George W. Bush on October 3, 2008...
.
Regulatory initiatives
During his tenure, Cox led the Commission to write new executive compensation rules calling for companies to spell out exactly how their executives are compensated, including new information such as the lump-sum cost of retirement benefits and explanations of why specific stock option grants were approved. The New York TimesThe New York Times
The New York Times is an American daily newspaper founded and continuously published in New York City since 1851. The New York Times has won 106 Pulitzer Prizes, the most of any news organization...
observed that the Commission "largely stood its ground amid pressure from compensation specialists, investor advocates, and industry groups." With more than 20,000 comment letters, Cox said, "No issue in the history of the SEC has
generated such interest."
One of his first initiatives was launching a plain English effort, to eliminate legalese in investor communications in favor of clear language that let investors focus on what was important, the better to hold a company's performance up to the light of day. Not only the executive compensation rules, but also disclosure rules for investment advisors and mutual funds—where more than half of U.S. households had their retirement and college savings—were subjected to the plain English requirements. Under Cox the SEC wrote new rules requiring the $10.6 trillion dollar mutual fund industry to make their prospectuses easier for investors to read, understand, and access.
Cox defended the 2002 Sarbanes-Oxley Act
Sarbanes-Oxley Act
The Sarbanes–Oxley Act of 2002 , also known as the 'Public Company Accounting Reform and Investor Protection Act' and 'Corporate and Auditing Accountability and Responsibility Act' and commonly called Sarbanes–Oxley, Sarbox or SOX, is a United States federal law enacted on July 30, 2002, which...
and resisted efforts to repeal it or scale it back legislatively. The greatest source of complaint about the law during his tenure was its Section 404, which produced compliance expenses far higher than the SEC under his predecessor had predicted. Working with the Public Company Accounting Oversight Board
Public Company Accounting Oversight Board
The Public Company Accounting Oversight Board is a private-sector, non-profit corporation created by the Sarbanes–Oxley Act, a 2002 United States federal law, to oversee the auditors of public companies. Its stated purpose is to 'protect the interests of investors and further the public interest...
, the SEC under Cox replaced the original auditing standard for Section 404 with a streamlined, more cost-effective version, and also provided new guidance for management intended to reduce unnecessary costs. At Cox's direction the agency undertook a nationwide Small Business Cost-Benefit Study to determine whether, as intended, the new auditing standard and management guidance had made compliance less expensive and better focused the 404 process on control elements that truly matter for companies of all sizes.
In June 2007 the Commission voted unanimously to repeal the so-called "uptick rule"
Uptick rule
The uptick rule refers to a trading restriction that disallowed short selling of securities except on an uptick. For the rule to be satisfied, the short must be either at a price above the last traded price of the security, or at the last traded price if that price was higher than the price in the...
or "tick test."
Uptick rule
The uptick rule refers to a trading restriction that disallowed short selling of securities except on an uptick. For the rule to be satisfied, the short must be either at a price above the last traded price of the security, or at the last traded price if that price was higher than the price in the...
The action was not controversial at the time: it was taken after an extensive multi-year study by the Office of Economic Analysis, begun in 2003 under Chairman Bill Donaldson
William H. Donaldson
William Henry Donaldson was the 27th Chairman of the U.S. Securities and Exchange Commission , serving from February 2003 to June 2005...
. The study found that the rule—which had never applied on NASDAQ
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
or to ECN
ECN
ECN may refer to:* Eastern Counties Newspapers, a company now known as Archant* Eastman Color Negative, a photographic processing system for motion-picture films* Electrochemical noise, fluctuations of current and potential...
s and other trading systems—had been rendered ineffective on the NYSE due to decimalization (that is, the reduction of the "tick" increment to a penny, as compared to the 1/8 or 12½¢ that was in effect when the rule was adopted in 1938). Its repeal has since become the subject of much debate, with some advocating its reinstatement. On July 15, 2008, Cox told a U.S. House hearing that the Commission was studying the potential institution of "a price test that could work with an increment of a nickel or dime" or some more meaningful amount.
Technological modernization
Technological modernization of the SEC was a Cox priority throughout his tenure. He introduced new technology for investor disclosure, compliance analytics, nationwide investigative work sharing, and management of funds recovered for investors. In August 2008 he rolled out the future replacement of the SEC's forms-based disclosure database, called EDGAREDGAR
EDGAR, the Electronic Data-Gathering, Analysis, and Retrieval system, performs automated collection, validation, indexing, acceptance, and forwarding of submissions by companies and others who are required by law to file forms with the U.S. Securities and Exchange Commission...
, with a new interactive disclosure system using computer-tagged data in the eXtensible Business Reporting Language
XBRL
XBRL is a freely available, market-driven, open, and global standard for exchanging business information. XBRL allows information modeling and the expression of semantic meaning commonly required in business reporting. XBRL is XML-based...
(XBRL
XBRL
XBRL is a freely available, market-driven, open, and global standard for exchanging business information. XBRL allows information modeling and the expression of semantic meaning commonly required in business reporting. XBRL is XML-based...
). The new system was designed to let future investors easily search, sort, and recombine information to generate reports and analysis from hundreds of thousands of companies and millions of forms. Under Cox the SEC oversaw the creation of a taxonomy of over 11,000 XBRL data tags that catalog every element of U.S. Generally Accepted Accounting Principles. In 2008 the Commission issued rules requiring all publicly traded companies and mutual funds in the United States to tag their financial information.
Another Cox technology initiative liberalized the proxy rules to allow investors and companies to use Electronic Shareholder Forums—virtual meeting places on the Internet to promote shareholder initiatives, conduct straw polls, apprise a company's directors of critical shareholder concerns, and inform shareholders of management's and directors' views.
In 2006 the SEC launched a war against Internet financial spam
Spam (electronic)
Spam is the use of electronic messaging systems to send unsolicited bulk messages indiscriminately...
, shutting down trading in companies that touted their stock by clogging investors’ in-boxes. Investor complaints about the practice fell from more than 220,000 per month in December 2006 to 70,000 per month in February 2007; Internet software and services company Symantec
Symantec
Symantec Corporation is the largest maker of security software for computers. The company is headquartered in Mountain View, California, and is a Fortune 500 company and a member of the S&P 500 stock market index.-History:...
credited the SEC with cutting financial spam by 30 percent.
These technological initiatives were widely supported, with one observer noting that Cox "earned virtually universal plaudits for efforts to modernize technology, transparency, and understandability of corporate reports, and to provide for apples-to-apples comparisons (for the first time ever) of corporate executive compensation."
Focus on individual investors and seniors
The particular needs of senior investors, whose ranks are growing rapidly, was a special Cox focus. In April 2006, the SEC held its first “Seniors Summit”, working with AARPAARP
AARP, formerly the American Association of Retired Persons, is the United States-based non-governmental organization and interest group, founded in 1958 by Ethel Percy Andrus, PhD, a retired educator from California, and based in Washington, D.C. According to its mission statement, it is "a...
, the Financial Industry Regulatory Authority
Financial Industry Regulatory Authority
In the United States, the Financial Industry Regulatory Authority, Inc., or FINRA, is a private corporation that acts as a self-regulatory organization . FINRA is the successor to the National Association of Securities Dealers, Inc. ...
, the North American Securities Administrators Association
North American Securities Administrators Association
The North American Securities Administrators Association , founded in Kansas in 1919, is the oldest international investor protection organization. NASAA is an association of state securities administrators who are charged with the responsibility to protect consumers who purchase securities or...
, and several state regulators; the conferences are now held annually. A nationwide sweep examination conducted by the SEC and authorities in seven states found that "free lunch" investment seminars, which draw large numbers of retirees, routinely involved significant fraud
Securities fraud
Securities fraud, also known as stock fraud and investment fraud, is a practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of the securities laws....
. Many were advised to put their retirement funds into equity-indexed annuities, where they could get stock market returns while keeping their money “safe”. But neither these investments, nor the sales agents, were registered with state or federal securities regulators—and investors were frequently unaware that it would be impossible to get their money back for as much as 15 years without paying a stiff penalty. The SEC enacted rules in 2008 to protect seniors and other investors from fraudulent and abusive practices in annuities sales.
International integration
During Cox's tenure the SEC significantly expanded its international activity. Between 2005 and 2008, Cox signed supervisory arrangements covering enforcement and regulatory cooperation with regulators in the United Kingdom, France, the Netherlands, Belgium, Portugal, Australia, Germany, Bulgaria, and Norway. As Chairman of the International Organization of Securities CommissionsInternational Organization of Securities Commissions
The International Organization of Securities Commissions is an association of organisations that regulate the world’s securities and futures markets....
' Technical Committee, he led international efforts to converge U.S. GAAP and International Financial Reporting Standards
International Financial Reporting Standards
International Financial Reporting Standards are principles-based standards, interpretations and the framework adopted by the International Accounting Standards Board ....
. In December 2007, the SEC adopted rules to permit foreign issuers to use IFRS
International Financial Reporting Standards
International Financial Reporting Standards are principles-based standards, interpretations and the framework adopted by the International Accounting Standards Board ....
without reconciliation to U.S. GAAP. And in November 2008, the
SEC issued a roadmap – with clear milestones along the way – that could take U.S. public companies to mandatory adoption of IFRS
International Financial Reporting Standards
International Financial Reporting Standards are principles-based standards, interpretations and the framework adopted by the International Accounting Standards Board ....
as early as 2014. Cox also initiated a mutual recognition process for foreign regulators, based on an assessment of whether the securities regulatory system in another country produces comparably high-quality results for investors, including in the area of enforcement. In August 2008 he executed an arrangement with the Australian Securities and Investments Commission
Australian Securities and Investments Commission
The Australian Securities & Investments Commission is an independent Australian government body that acts as Australia's corporate regulator...
under which the SEC could approve exemptions allowing Australian-registered securities exchanges to operate in the U.S. without having also to register with the SEC, and U.S. exchanges would have the same privilege in Australia. As of 2008, the SEC was in mutual recognition discussions with regulators in Canada, and also in preliminary discussions with the Committee of European Securities Regulators.
Law enforcement
International enforcement also stepped up considerably under Cox. During 2008 the SEC made 556 requests of foreign regulators for assistance with SEC investigations, many of which were connected to potential wrongdoing in the subprime market. Among the significant international cases the Commission has brought were the highly-publicized 2008 charges against Hong Kong-based insider trading in Dow Jones prior to its acquisition by News CorporationNews Corporation
News Corporation or News Corp. is an American multinational media conglomerate. It is the world's second-largest media conglomerate as of 2011 in terms of revenue, and the world's third largest in entertainment as of 2009, although the BBC remains the world's largest broadcaster...
. Under Cox the SEC also brought the largest number of cases in its history charging corporations and their officers with foreign bribery under the Foreign Corrupt Practices Act
Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act of 1977 is a United States federal law known primarily for two of its main provisions, one that addresses accounting transparency requirements under the Securities Exchange Act of 1934 and another concerning bribery of foreign officials.- Provisions and scope...
and imposed record penalites for these cases.
Overall, enforcement was Cox's stated priority beginning in 2005 and throughout his chairmanship. He moved quickly to settle the debate over whether it was legitimate to impose penalties on corporations, adopting a policy that made clear the SEC "isn't turning out to be the corporate-friendly place that many in the boardroom set were hoping for." Within the SEC budget, as of 2008, he had increased the share devoted to enforcement to its highest level in 20 years. Nonetheless, the SEC's overall appropriation was held steady during two of his budget years, first by a Republican and then a Democratic Congress, and it was increased by only 2% in a third year. These sub-inflation agency budgets, combined with merit pay increases for staff, caused the total enforcement personnel to decline. Critics have attacked the underfunding of the SEC and blamed Cox, though Congress and the administration clearly share the responsibility. When the agency budget was finally increased in fiscal 2008, he increased enforcement personnel by 4%.
Beginning early in his chairmanship he focused the agency's enforcement efforts on stock option backdating
Options backdating
Options backdating is the practice of issuing options contracts on a later date than that which the options have listed. While options backdating is not, in and of itself, an illegal practice, intentional backdating that coincides with low underlying stock prices and accounting reports that claim...
, an illicit practice that had been exposed after the 2002 Sarbanes-Oxley Act
Sarbanes-Oxley Act
The Sarbanes–Oxley Act of 2002 , also known as the 'Public Company Accounting Reform and Investor Protection Act' and 'Corporate and Auditing Accountability and Responsibility Act' and commonly called Sarbanes–Oxley, Sarbox or SOX, is a United States federal law enacted on July 30, 2002, which...
changed the rules regarding the reporting of stock option
Employee stock option
An employee stock option is a call option on the common stock of a company, issued as a form of non-cash compensation. Restrictions on the option attempt to align the holder's interest with those of the business shareholders. If the company's stock rises, holders of options generally experience a...
grants. Under Cox the SEC investigated more than 160 stock option backdating
Options backdating
Options backdating is the practice of issuing options contracts on a later date than that which the options have listed. While options backdating is not, in and of itself, an illegal practice, intentional backdating that coincides with low underlying stock prices and accounting reports that claim...
cases, aided by the fact that the reporting forms for stock option
Employee stock option
An employee stock option is a call option on the common stock of a company, issued as a form of non-cash compensation. Restrictions on the option attempt to align the holder's interest with those of the business shareholders. If the company's stock rises, holders of options generally experience a...
disclosure were among the first to be mandated in “interactive data” format. Some of these cases were noteworthy for their size: in December 2007 the agency won $468 million in a settlement for stock option backdating
Options backdating
Options backdating is the practice of issuing options contracts on a later date than that which the options have listed. While options backdating is not, in and of itself, an illegal practice, intentional backdating that coincides with low underlying stock prices and accounting reports that claim...
against the former Chairman and CEO of UnitedHealth Group
UnitedHealth Group
UnitedHealth Group Incorporated is a diversified health and "well-being" company. Headquartered in Minnetonka, Minnesota, UnitedHealth Group offers a spectrum of products and services through two operating businesses: United Healthcare and Optum. Through its family of subsidiaries and divisions,...
.
Cox also aggressively used the agency's “Fair Funds” authority to distribute funds recovered from securities law violators directly to injured investors. By February 2008 the SEC had returned more than $3.5 billion to wronged investors, including more than $2 billion in 2007 alone. To expedite the return of the funds, cut red tape and lower costs, Cox created a new Office of Collections and Distributions. A few weeks later, in May 2008, the new Office began sending more than $800 million in Fair Funds to harmed investors in American International Group, Inc. (AIG)
AIG
AIG is American International Group, a major American insurance corporation.AIG may also refer to:* And-inverter graph, a concept in computer theory* Answers in Genesis, a creationist organization in the U.S.* Arta Industrial Group in Iran...
, which settled SEC charges of financial fraud
Securities fraud
Securities fraud, also known as stock fraud and investment fraud, is a practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of the securities laws....
. In 2006 the Commission obtained a $350 million penalty from Fannie Mae after accusing it of accounting fraud
Accounting scandals
Accounting scandals, or corporate accounting scandals, are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations...
; the penalty was one of the largest in Commission history. The following year the Commission charged Freddie Mac with accounting fraud
Accounting scandals
Accounting scandals, or corporate accounting scandals, are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations...
and recovered a $50 million penalty.
As the 2008 credit crunch
Credit crunch
A credit crunch is a reduction in the general availability of loans or a sudden tightening of the conditions required to obtain a loan from the banks. A credit crunch generally involves a reduction in the availability of credit independent of a rise in official interest rates...
spread to municipal finance
Municipal bond
A municipal bond is a bond issued by a city or other local government, or their agencies. Potential issuers of municipal bonds includes cities, counties, redevelopment agencies, special-purpose districts, school districts, public utility districts, publicly owned airports and seaports, and any...
, the auction rate securities
Auction Rate Security
An auction rate security typically refers to a debt instrument with a long-term nominal maturity for which the interest rate is regularly reset through a dutch auction. Since February 2008, most such auctions have failed, and the auction market has been largely frozen...
market froze, leaving investors without access to their cash. The SEC immediately investigated the largest firms in the market and entered into settlements that are the largest in the history of the SEC, amounting to up to $30 billion to injured
investors.
Cox also targeted municipal securities
Municipal bond
A municipal bond is a bond issued by a city or other local government, or their agencies. Potential issuers of municipal bonds includes cities, counties, redevelopment agencies, special-purpose districts, school districts, public utility districts, publicly owned airports and seaports, and any...
fraud
Securities fraud
Securities fraud, also known as stock fraud and investment fraud, is a practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of the securities laws....
. In April 2008 the SEC charged five former San Diego city officials with securities fraud
Securities fraud
Securities fraud, also known as stock fraud and investment fraud, is a practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of the securities laws....
involving billions in undisclosed pension liabilities that had placed the city and taxpayers in serious financial jeopardy. Throughout his chairmanship he railed against the inadequacy of disclosure to investors in municipal securities, which the SEC does not regulate, and asked Congress for explicit authority for the agency to do so. In December 2008, the SEC under his leadership authorized the creation of a free, Internet-accessible repository for municipal finance disclosure. "With liquidity problems of municipal auction rate securities and rating downgrades of municipal bond insurers contributing to the current credit crisis, the disclosure and transparency of the municipal markets have never been more critical", he said.
In late December 2008, following the filing of SEC charges against notorious New York investment advisor
Investment Advisor
The term Investment Advisor is an individual or firm who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities...
Bernard Madoff
Bernard Madoff
Bernard Lawrence "Bernie" Madoff is a former American businessman, stockbroker, investment advisor, and financier. He is the former non-executive chairman of the NASDAQ stock market, and the admitted operator of a Ponzi scheme that is considered to be the largest financial fraud in U.S...
alleging a $50 billion fraud, Cox stated that he was "gravely concerned" that "specific and credible evidence" provided to the agency over a period of at least 10 years had not previously been referred to the Commission for commencement of a formal investigation. He ordered an internal investigation by the agency's Inspector General. According to Bloomberg News, investigators have since found evidence of Madoff's misconduct stretching as far back as at least the 1970s.
Response to the beginning of the 2008 U.S. Recession
Under his leadership, the SEC on September 17 and 18, 2008, imposed a variety of both permanent and emergency restrictions on short selling in response to the liquidity crisis. Abusive naked short sellingNaked short selling
Naked short selling, or naked shorting, is the practice of short-selling a financial instrument without first borrowing the security or ensuring that the security can be borrowed, as is conventionally done in a short sale. When the seller does not obtain the shares within the required time frame,...
, in which the seller intentionally fails to deliver the shares sold short in time for settlement, was banned outright, an exception for options market maker
Market maker
A market maker is a company, or an individual, that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn. From a market microstructure theory standpoint, market makers are net sellers of an option to be...
s that had been in place for several years was eliminated, and a new anti-fraud provision, Rule 10b-21, was adopted to give specific enforcement authority in such cases. In September 2008, short selling of 799 financial stocks was temporarily curtailed in response to rumors accompanied by heightened short selling activity in the shares of major financial institutions.
On September 26, 2008, Cox ended the 2004 program for voluntary regulation of investment bank holding companies, begun under SEC Chairman William Donaldson
William H. Donaldson
William Henry Donaldson was the 27th Chairman of the U.S. Securities and Exchange Commission , serving from February 2003 to June 2005...
and then-Director of Market Regulation (later SEC Commissioner) Annette Nazareth
Annette Nazareth
Annette LaPorte Nazareth is an American attorney who served as a Commissioner of the U.S. Securities and Exchange Commission from August 4, 2005 to January 31, 2008. She is currently a partner at Davis Polk & Wardwell working on complex regulatory matters and transactions in the firm's Washington,...
. The program "was fundamentally flawed from the beginning, because investment banks could opt in or out of supervision voluntarily" Cox said. A critical report by the SEC inspector general that evaluated the program in light of the Bear Stearns
Bear Stearns
The Bear Stearns Companies, Inc. based in New York City, was a global investment bank and securities trading and brokerage, until its sale to JPMorgan Chase in 2008 during the global financial crisis and recession...
near-failure in March 2008 found that while "Bear Stearns
Bear Stearns
The Bear Stearns Companies, Inc. based in New York City, was a global investment bank and securities trading and brokerage, until its sale to JPMorgan Chase in 2008 during the global financial crisis and recession...
was compliant with the capital and liquidity requirements" at the time of its acquisition, "its collapse raises serious questions about the adequacy of these requirements." However, according to the Inspector General, his report "did not include a determination of the cause of Bear Stearns'
Bear Stearns
The Bear Stearns Companies, Inc. based in New York City, was a global investment bank and securities trading and brokerage, until its sale to JPMorgan Chase in 2008 during the global financial crisis and recession...
collapse" or determine "whether any of these issues directly contributed to Bear Stearns'
Bear Stearns
The Bear Stearns Companies, Inc. based in New York City, was a global investment bank and securities trading and brokerage, until its sale to JPMorgan Chase in 2008 during the global financial crisis and recession...
collapse." On that subject, the report stated, "we have no evidence linking these significant deficiencies with the cause of Bear Stearns'
Bear Stearns
The Bear Stearns Companies, Inc. based in New York City, was a global investment bank and securities trading and brokerage, until its sale to JPMorgan Chase in 2008 during the global financial crisis and recession...
collapse." Cox criticized the oversight program on the ground that because of its voluntary nature and the SEC's limited statutory authority, the agency could not force changes in the hundreds of unregulated subsidiaries of large investment banks such as Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
, Morgan Stanley
Morgan Stanley
Morgan Stanley is a global financial services firm headquartered in New York City serving a diversified group of corporations, governments, financial institutions, and individuals. Morgan Stanley also operates in 36 countries around the world, with over 600 offices and a workforce of over 60,000....
, Merrill Lynch
Merrill Lynch
Merrill Lynch is the wealth management division of Bank of America. With over 15,000 financial advisors and $2.2 trillion in client assets it is the world's largest brokerage. Formerly known as Merrill Lynch & Co., Inc., prior to 2009 the firm was publicly owned and traded on the New York...
, Lehman Brothers
Lehman Brothers
Lehman Brothers Holdings Inc. was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA , doing business in investment banking, equity and fixed-income sales and trading Lehman Brothers Holdings Inc. (former NYSE ticker...
and Bear Stearns
Bear Stearns
The Bear Stearns Companies, Inc. based in New York City, was a global investment bank and securities trading and brokerage, until its sale to JPMorgan Chase in 2008 during the global financial crisis and recession...
as bank regulators could do with bank holding companies.http://www.sec.gov/news/testimony/2008/ts092308cc.htmIn testimony before Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
on several occasions in 2008, he asked for statutory authority to regulate investment bank holding companies.]
In addition to the fact that the Gramm-Leach-Bliley Act
Gramm-Leach-Bliley Act
The Gramm–Leach–Bliley Act , also known as the Financial Services Modernization Act of 1999, is an act of the 106th United States Congress...
did not give the SEC the authority to regulate large investment bank holding companies, Cox noted that investors were vulnerable to other regulatory gaps such as the fact that the $60 trillion market for credit default swaps
Credit default swap
A credit default swap is similar to a traditional insurance policy, in as much as it obliges the seller of the CDS to compensate the buyer in the event of loan default...
is completely unregulated. "Neither the SEC nor any regulator has authority even to require minimum disclosure", he said. In testimony and public statements he urged Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
to enact remedial legislation.
Cox said that during the buildup of the credit crisis, when the credit rating agencies
Credit rating agency
A Credit rating agency is a company that assigns credit ratings for issuers of certain types of debt obligations as well as the debt instruments themselves...
were still unregulated, they gave top credit ratings to financial instruments which packaged risky loans and spread the negative impacts of the credit crisis more broadly throughout the markets. Following the first-time SEC registration of the credit rating agencies
Credit rating agency
A Credit rating agency is a company that assigns credit ratings for issuers of certain types of debt obligations as well as the debt instruments themselves...
in September 2007 under newly enacted legislative authority, he ordered a 10-month examination of the three major rating agencies
Credit rating agency
A Credit rating agency is a company that assigns credit ratings for issuers of certain types of debt obligations as well as the debt instruments themselves...
that uncovered significant weaknesses in their ratings practices for mortgage-backed securities
Mortgage-backed security
A mortgage-backed security is an asset-backed security that represents a claim on the cash flows from mortgage loans through a process known as securitization.-Securitization:...
and that called into question the impartiality of their ratings. The results were reported to Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
in July 2008. The SEC immediately commenced a rulemaking which concluded on December 3, 2008 with approval of a series of measures to regulate the conflicts of interests, disclosures, internal policies, and business practices of credit rating agencies
Credit rating agency
A Credit rating agency is a company that assigns credit ratings for issuers of certain types of debt obligations as well as the debt instruments themselves...
. The regulations were intended to ensure that firms provide more meaningful ratings and greater disclosure to investors concerning collateralized debt obligation
Collateralized debt obligation
Collateralized debt obligations are a type of structured asset-backed security with multiple "tranches" that are issued by special purpose entities and collateralized by debt obligations including bonds and loans. Each tranche offers a varying degree of risk and return so as to meet investor demand...
s and residential mortgage-backed securities
Residential mortgage-backed security
Residential mortgage-backed securities are a type of bond commonly issued in American security markets. They are a type of mortgage-backed security which are backed by mortgages on residential rather than commercial real estate.-Origins:...
.
In an interview with the Washington Post in late December 2008, Cox said, "What we have done in this current turmoil is stay calm, which has been our greatest contribution -- not being impulsive, not changing the rules willy-nilly, but going through a very professional and orderly process that takes into account unintended consequences and gives ample notice to market participants." Cox added that the Commission's decision to impose a three-week ban on short selling of financial company stocks was taken reluctantly, but that the view at the time, including from Treasury Secretary Henry M. Paulson and Federal Reserve chairman Ben Bernanke
Ben Bernanke
Ben Shalom Bernanke is an American economist, and the current Chairman of the Federal Reserve, the central bank of the United States. During his tenure as Chairman, Bernanke has overseen the response of the Federal Reserve to late-2000s financial crisis....
, was that "if we did not act and act at that instant, these financial institutions could fail as a result and there would be nothing left to save." In a December 2008 interview with Reuters, he explained that the SEC's Office of Economic Analysis was still evaluating data from the temporary ban, and that preliminary findings point to several unintended market consequences and side effects. "While the actual effects of this temporary action will not be fully understood for many more months, if not years... knowing what we know now, I believe on balance the Commission would not do it again."
Cox retired as chairman of the SEC at the end of the Bush administration
George W. Bush administration
The presidency of George W. Bush began on January 20, 2001, when he was inaugurated as the 43rd President of the United States of America. The oldest son of former president George H. W. Bush, George W...
, on January 20, 2009.
Current career
Following his tenure at the SEC and a 24-year career in elected and appointed office that included service in the legislative, executive, and judicial branches of the U.S. government, Cox returned to his home in southern California and the practice of law, which had been his pre-Washington profession. He joined the Boston-based international law firm of Bingham McCutchen LLP as a partner in the firm's Corporate, M&A and Securities practice, resident in its Orange County, CaliforniaOrange County, California
Orange County is a county in the U.S. state of California. Its county seat is Santa Ana. As of the 2010 census, its population was 3,010,232, up from 2,846,293 at the 2000 census, making it the third most populous county in California, behind Los Angeles County and San Diego County...
office. He also became a principal in Bingham Consulting Group, the firm's affiliated consulting business. Other notable principals in Bingham Consulting include former California governor Pete Wilson
Pete Wilson
Peter Barton "Pete" Wilson is an American politician from California. Wilson, a Republican, served as the 36th Governor of California , the culmination of more than three decades in the public arena that included eight years as a United States Senator , eleven years as Mayor of San Diego and...
and former New Hampshire
New Hampshire
New Hampshire is a state in the New England region of the northeastern United States of America. The state was named after the southern English county of Hampshire. It is bordered by Massachusetts to the south, Vermont to the west, Maine and the Atlantic Ocean to the east, and the Canadian...
governor Steve Merrill
Steve Merrill
Stephen E. "Steve" Merrill is an American lawyer and Republican politician from Manchester, New Hampshire.- Biography :Merrill was born in Hampton, New Hampshire. He studied at the University of New Hampshire, graduating from it in 1969. He received his J.D...
, who is its president.
External links
- Official Biography — SEC Website
- Christopher Cox Sworn in as SEC Chairman — SEC Press Release
- President Bush Nominates Congressman Cox as SEC Chairman — White HouseWhite HouseThe White House is the official residence and principal workplace of the president of the United States. Located at 1600 Pennsylvania Avenue NW in Washington, D.C., the house was designed by Irish-born James Hoban, and built between 1792 and 1800 of white-painted Aquia sandstone in the Neoclassical...
Press Release - Speeches and Statements as SEC Chairman
- The changes I've seen — Farewell letter by Chris Cox in the Orange County Register
Congressional